Help children learn through spending/saving plans April, 2011

Money management is simply knowing how much money you have and then planning how to use it.  It’s helpful to have a spending plan.  Most often I like to call it a spending/saving plan to help recognize the importance of savings.  Other people call it a budget.

Parents don’t have to wait until children are old enough to earn money to start talking about spending/saving plans.  As soon as children start getting an allowance or a sum of money, introduce them to the idea of a spending/saving plan.

A plan can be for a week, a month or a whole year, depending on the childs age and maturity, and on the amount and frequency of allowance or other income.  The plan for a 5-year-old would be very different from a 15-year-old’s plan.

A spending plan is a simple guide to show where money comes from, where its going, and how to use it to reach goals.  Making spending/saving plans with your children can help you decide how much allowance each child receives.

The plan is a tool to guide them in making decisions and choices.  It helps teach the difference between wants and needs.  Or in other words what is a ‘gotta have’ versus what is a ‘nice to have’.

It’s good financial modeling for children to observe their parents to putting together a spending/saving plan for the family, too.  Share how the plan will help the family achieve goals and plus pay for the family needs and wants.

For more information on helping your child learn about money, visit the University of Minnesota Extension website at www.extension.umn.edu.  In the Family section, you’ll find many resource to guide you in building your child’s financial capability.